Ezra Klein

To cut deficit, go where the money is

American politics is one long argument about what government should or shouldn't be doing, and how it should or shouldn't be doing it. It's rare that we step back, take in the larger picture and ask what it is doing.

The release of the president's proposed 2012 budget is a good time to do that. If you want to know what the federal government is really doing, just look where it's spending our money.

Two of every five dollars goes to Social Security, Medicare or Medicaid, all of which provide some form of insurance. A bit more than a buck goes to the military. Then there's a $1.50 or so for assorted other spending — education, infrastructure, environmental protection, farm subsidies, etc. Some of that, like unemployment checks and food stamps, is also best understood as forms of insurance. And then there's another 40 cents of debt repayment.

Calvin Coolidge once said that the business of America is business. Well, the business of the American government is insurance. Literally. If you look at how the federal government spends our money, it's an insurance conglomerate protected by a large standing army.

But you wouldn't know it to listen to the debate over the budget. When House Republicans talk about cutting spending and the Obama administration talks about freezing spending, neither group is talking about the vast expanse of the government's commitments. They're looking at a small corner of the budget, the 12.3 percent known as non-defense discretionary spending. The stuff that's not Medicare, not Medicaid, not Social Security or the military. It's the odds and ends, so to speak.

Deficits are unpopular, and so are the specifics of deficit reduction. So politicians have developed a few ways to sound fiscally responsible without committing to anything politically damaging. The term "waste, fraud and abuse," for instance. There is plenty of waste, fraud and abuse in the government, but there's little agreement on what that waste, fraud and abuse is. Farm subsidies, for instance, don't seem like waste to farmers. The defense budget looks tighter to hawks than it does to doves. Gov. Mitch Daniels was right when he told the crowd at the Conservative Political Action Conference that waste, fraud and abuse are worth little when it comes to cutting the deficit. Focusing on the three items "trivializes what needs to be done, and misleads our fellow citizens to believe that easy answers are available to us."

Promising to freeze non-defense discretionary spending has also come into vogue. It has the dual advantages of sounding tough while remaining vague. But the single biggest chunk of that spending is on education, and according to a Pew poll, that is the part of the budget that Americans are least interested in cutting.

And though cutting non-defense discretionary spending might buy us some time on the deficit, we're eventually going to have to do as legendary robber Willie Sutton did when he started hitting banks. We'll have to go where the money is: To our social insurance programs, and our military. Of this group, Social Security is in the best shape, and is by far the most efficient. It should be last on our list. Not, as it often seems to be, first.

The military remains largely untouched. This is one case where politicians are lagging behind the public: In the Pew poll, military spending was the third-least-popular category of spending, even though in Washington it's frequently considered politically unassailable. But perhaps we'll see more action on this soon: A bipartisan group of legislators created the Sustainable Defense Task Force to look at ways to reduce our military spending, and the plan it developed could save a trillion dollars over the next 10 years.

That said, it's Medicare and Medicaid that pose the largest long-term threat to the budget. They're big — about 20 percent of the budget right now — but the real problem is the speed with which they're getting bigger. The health reform law makes a start on curbing their growth, but we need to go further and faster. We're an insurance company now, and we can't continue to dither when it comes to righting our core business.

© 2011 Washington Post

To cut deficit, go where the money is 02/15/11 [Last modified: Tuesday, February 15, 2011 8:03pm]

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